No ITC can be claimed on 5% GST paid on License Fee to Indian Railway or IRCTC: AAAR [Read Order]

The Uttar Pradesh Appellate Authority of Advance Ruling (AAAR) while upholding the AAR’s ruling held that no Input Tax Credit (ITC) can be claimed on 5% GST paid on a license fee to Indian Railway or IRCTC.

The appellant, M/s. Amar Food Products is engaged in the running of General Minor Units (GMU) at Railway Platforms at which the sale of packed food items, drinks, and cooked items are done.

The appellant sought the advance ruling on the issue of whether the supply of food items at GMUs (General Minor Units) at Railway Platforms which include the only counter sale of packed food items, drinks, and cooked items shall be treated as “Sale of Goods” or “Sale of Services”.

The other issue raised as if it is the sale of services, whether the whole revenue shall be taxed at the rate of 5% without ITC under serial no. 7(ia) of notification no. 11/2017-CT (Rate) dated 28.06.2017 or assessee can opt to pay tax at the rate of 18% with ITC under serial no. 7(ix) of that notification.

The AAR ruled that the supply of Food items at GMUS (General Minor Units) at railway platforms which includes the only counter sale of packed food items, drinks, and cooked items shall be treated as ‘Supply of Services’.

The AAR further ruled that whole revenue shall be taxed at the rate of 5% without ITC under serial No. 7(ia) of notification No. 11/2017- Central Tax (Rate) dated June 28, 2017. Appellant cannot claim the Input Tax Credit of GST paid on license fees to Indian railway or IRCTC.

However, the appellant being aggrieved by the AAR’s ruling filed the appeal before the AAAR.

The Coram of Amrita Soni and Ajay Dixit ruled that the appellant has quoted case laws prior to the GST era, whereas with the introduction of GST, the ambiguity in taxation has been removed to a greater extent. The AAAR observed that after the introduction of Sl No. 7(a) in the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 (as amended) the Law is very much clear that the GST rate on supply of goods, being food or any other article for human consumption or any drink, by the Indian Railways or Indian Railways Catering and Tourism Corporation Ltd or their licensees, whether in trains or at platforms, will be 5% without ITC.